Divestment to be completed in H2 2024, and is not expected to affect net asset value or distribution per unit for FY2024
PARAGON Real Estate Investment Trust has entered into a sale-and-purchase agreement for the divestment of The Rail Mall for a cash consideration of S$78.5 million.
The Reit manager said in a bourse filing on Thursday (Jun 20) that the price was arrived at on a willing-buyer, willing-seller basis, taking into account the projected net property income of the Mall, the retail market outlook, and the property yield.
The buyer was not named in the announcement, but The Business Times previously reported that it understood it to be a private investor.
The divestment, expected to be completed in the second half of 2024, is part of the Reit manager’s portfolio management strategy and “in line with its objective to unlock value in Paragon Reit’s portfolio”.
The divestment is not expected to have a material impact on the Reit’s net asset value and distribution per unit for the financial year ending Dec 31, 2024.
Proceeds from the divestment will be used to pare down outstanding debt obligations, finance potential acquisitions and asset-enhancement initiatives, and/or make distributions to unitholders, said the manager.
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The Rail Mall, located along Upper Bukit Timah Road, has nearly 50,000 square feet (sq ft) of net lettable area, and sits on a site sold by the state with a 99-year leasehold tenure from March 1947.
This leaves a balance of 21 years and eight months. The property was valued at S$62 million as at Dec 31, 2023.
The units of Paragon Reit ended Thursday at S$0.84, up S$0.005 or 0.6 per cent, before the announcement.
